Brain food: Global business - Moment of e-truth

Brain food: Global business - Moment of e-truth - New start-ups, which until recently were burning up cash without a second thought, have suddenly hit a massive liquidity crisis. In the past their motto was 'the higher the losses the more attractive the b

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Last Updated: 09 Oct 2013

New start-ups, which until recently were burning up cash without a second thought, have suddenly hit a massive liquidity crisis. In the past their motto was 'the higher the losses the more attractive the business'. No more.

It was partly the share prices that helped them do it. With the unstoppable run on their equity, firms 'paid' for gigantic marketing campaigns, 'bought up' other businesses and turned their colleagues into paper millionaires.

Profits? No sign of them. Future prospects? Uncertain. Shareholders didn't mind - until now.

The shake-out has started. Many start-ups no longer know how they will pay their suppliers and employees. Banks are cutting off credit lines, potential investors are shying away.

The New Economy is far from finished - but it's getting a long overdue reality check.

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